Havells India, which started its operations as a B2B company, has been increasing its B2C portfolio. At present, the B2C segment of the company stands at 40 per cent of its total turnover of around Rs 8,500 crore. The company is diversifying its water purifier segment, where it has stepped up with a wide range. R N Bhaskar and Pankaj Joshi speak to Shashank Shrivastav, Vice-President of Havells India, to understand the purifiers market and triggers for its growth.

Edited excerpts:

What was the background thought that led to this specific product enhancement?

We have been working on the water purification product range for the last two years. It has been built to address today’s realities. Two to three decades ago, we would tend to drink water from any source. But the deterioration in water quality over the years has been drastic. Today’s generation will avoid water from any unknown source, nor do they let their children do the same.

The reasons are obvious. First of course is urbanisation and the resultant greater waste generation from a relatively smaller area. Today, waste in cities goes to landfills which either contaminates ground water or in some cases even local supply sources. Media estimates say that 75 per cent of urban waste is not processed. The second is increased industrialisation without commensurate increase in effluent treatment capacities. The third is the rampant use of pesticides in agriculture which again contaminate the water sources.

The sum of this is strong increase of nitrate, sulphate, fluoride, arsenic and such harmful soluble elements, in water bodies. Our ground research in Bihar has shown that water in 36 of the 38 districts surveyed has arsenic contamination. According to various hospitals in the region, cancer cases are on the rise. The situation will develop into a crisis someday.

How does the present industry situation pan out?

Now with this background, technically speaking, use of reverse osmosis is the logical plan. Today, many existing purifier players claim use of multiple technologies to remove impurities. The RO technology by nature, while removing impurities, also removes certain good elements. Water, the most balanced element, becomes imbalanced. India is fortunate to have water which leans towards alkalinity but with such treatment it becomes acidic in nature and that impacts health.

To remedy this situation, existing products use the RO and UF technologies in tandem. A small percentage of water goes to UF section, where the filters are a tenth of the efficiency of RO filters. So all the contaminants cannot be handled in the quest to make water less acidic. Hence the very purpose of the purification is dented somewhat.

In case of our product, the water is passed entirely through the RO filter, which takes care of the contaminants but then the pH level of water reduces. Then, we re-mineralise it through seaweed extracts. These are totally natural, and help get the pH value back to the 7-8.5 range which is neutral to alkaline and represents the best quality of water

What would be the market estimates of the product?

The market estimates can be vague. We would say that the total market would be Rs 6,000 crore as of March 2018. Here, the organised sector has around 60 per cent share in value terms, but much less in volumes because local products invariably sell with lower prices.

The second aspect is that this market figure would include service income of Rs 1,500 crore which is entirely the organised sector. The unorganised sector is much bigger in service income and there is no reliable size estimate as of now. We can safely say that the sector would grow at 20 per cent year- on-year for quite some time.

On the margins front at the industry level, the figure in case of equipment sales would be in the 20-25 per cent range. For service income, the figure would be 30-35 per cent at the industry level. The key to raising margins in equipment sales would be greater in-house contribution. Today, as new entrants, our main internal contribution is technology (like say cartridges) and design, but there is a substantial element of sourcing. This will reduce two years down the line, when volumes will hopefully pick up enough to justify more investment in in-house activity. As far as the market goes, in line with our current focus, we are looking only at the B2C market, like our similar products.

How different is your strategy for this product?

This product is in line with our previous launches in the B2C segment— when the product is in the market, it addressees gap which hitherto was not recognised as such.

Let us look at our CFL line which was launched in 2002. CFL bulbs then used to have hand-filling of mercury which was somewhat unhealthy and quantity could not be standardised. We came with pill-dosing technology, wherein a mercury pill was injected. This reduced human handling and standardised the quantum of mercury much below the BIS norms, without impacting brightness. In home wires, flame retardant wires were an upmarket niche. We came with a range which was entirely flame retardant and the market had to adapt to the standard, bringing down the cost as well to mass product level.

In water heaters, our product range came with in-built ELCB, which causes the geyser to trip if there is any danger of shock, and prevents accidents in a wet environment. This again was an add-on before Havells made it a basic design component. In fans, we were a late entrant but we launched multi-colour range across a huge price range. The water purifier is just an extension of the thought process.

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